(Bloomberg) -- The Bank of Ghana left the benchmark interest rate unchanged due to concerns over the outlook for inflation because of pressures on its currency.
The monetary policy committee held the rate at 29% for a third straight meeting, matching the median estimate of seven economists in a Bloomberg survey.
The MPC decided to maintain the rate as there is “some uncertainty regarding the inflation path for the year given the recent exchange rate pressures, upward adjustments in utility tariffs” and increases in fuel prices, Governor Ernest Addison told reporters Friday in the capital, Accra. The developments have resulted in a slightly elevated inflation profile for the year and led to risks being tilted slightly to the upside, he said.
The cedi remained at a record low of 15.5000 per dollar by 12:26 p.m. in Accra following the decision.
Annual inflation slowed slightly to 22.8% last month from 23.1% in May and has been above the 10% ceiling of the central bank’s target range for more than three years.
It’s remained sticky due to the weakness in the cedi. The unit has lost more than 5% of its value against the dollar since the MPC kept borrowing costs unchanged at its May meeting.
The depreciation has been fueled by rising dollar demand for imports and a decline in cocoa earnings. Revenue from exports of the beans, which Ghana uses to defend the currency, fell 48% to $760 million in the first half of this year.
A mix of adverse weather and disease has reduced output in the world’s second-biggest producer of the chocolate ingredient.
--With assistance from Barbara Sladkowska.
(Updates with comment from governor in paragraph two and market moves in three.)
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